New home purchase - questions

[llecs]

OK, we started the process on 12/4 and are diving into this head first. I believe we saw 20 homes within the past couple of weeks through today and saw every one on our list within our given target area. We've narrowed it to 3-4 and are ready to put an offer on one this week.

The top home we are looking at (suburban DC) is being sold "As-Is" but isn't a F/C or short sale. Question: Are there any danagers to look out for in a "As-Is" home? The only info I have on it is that the owners are going through a divorce, are the org. owners, and there may be some sump pump issues (water at the bottom of the drain when it had not rained for the prior couple weeks). There are may be water damage in a corner in the concrete walls in the basement.

Another question: It is located about 1/2 block from high-powered electrical transmission lines. How does that impact the resale value? Could we use that to our advantage?

[Anonymous]

In the case of divorce, my guess would be that 'as-is' means they need to sell it and having to fix something would only complicate divorce proceedings (who pays for it?).  I would make your offer contingent on the home inspection to determine if there are any issues.  You probably won't get them fixed but you can get the repair costs deducted from your final offer price.  We bought a house 'as-is' that was being sold for an estate but we were still able to get some things taken care of like the removal of the old oil tank in the basement that was actually a requirement by law and other things we got estimates for and reduced the final price by that amount.

[Lel]

Defintely need the inspection contingency, especially with potential water issues in the basement.  Was anything of the sort mentioned in the disclosures?

With regard to the high-tension wires close by, I'd say that the effect of these transmission lines should already be factored into the current value.  As long as the listing price was based on comparable nearby sales, then there's probably not much room for negotiation.  If the house has been sitting on the market for a while, however, then it can be argued that it is overpriced and you potentially have quite a bit of leverage.  There have been studies that have indicated that if I home is listed by x% above its true fair market value, then it will typically sell for x% below its fair market value.

We looked at a house that was close to high-tension wires.  We went back at night when it was quieter, and we could hear a faint but distinct "hum" that we presume was from the lines.  I'd heard a similar thing on a golf course that was crossed by similar lines.  While it wasn't noisy by any stretch of the imagination, I think it would have gotten on my nerves in a short period of time.

[Anonymous]

I agree with Finn...'as-is' can run the spectrum of meaning multiple things. 

As-is isn't a problem unless any of the items being left as-is are problems with your particular loan program. 

For example, I had an as-is sale that also had the pre-condition that any buyer either make a cash offer or seek a rehab loan such as 203k.  The property had material issues that would have eliminated conventional and traditional non-rehab FHA loans.  It doesn't sound like you are looking at anything quite as substantial.   Roofs are another spot where 'as-is' can be a problem. 

Good luck...nice time of year to dive in feet first.  Spring market is great--if you like other buyers creating multiple offer situations and running your price up. 

[llecs]

Good to know about as-is. Nothing had been disclosed by the owners on the MRIS listing and it had been on the market for 3-4 months already. It was org. listed at $602k and then dropped to $535k. I checked the sale and tax records for the neighborhood and the price now is on par with others. I guess our agent is doing more digging on that.

However, all of this may have gone to the wayside. Looks like the status was updated to contract contigent just this afternoon. Maybe it wasn't meant to be.

[MarineVietVet]

It's one thing to buy a used car or anything else "as is" but this is too much money to take a chance on.

I personally would not do it. It makes me nervous thinkng about it and it's not my money. 

[mauve]

I'd want a really good inspector, personally.  There's probably another house, llecs.  I'm also really chicken about any house with a non-dry basement. 

[BrianB_The_Loan_Professor]

Good Luck with the purchase llecs

this is obviously one of the largest financial transactions you will likely make in your life time

so get the inspectiona nd deal with any issues upfront

drainage/basement issues can be a nightmar in underwriting

better resolved before they even catch wind of it in my opinion

I have never had an UW allow the slightest issues with regards to this slide

There will be other homes

Being from Cali I dont get out that way much but I was back in that area over the summer

I hope you get a lot of house for that price

I was on vacation watching some baseball so I wasnt in work mode but I didnt see many big mansions in the area...........

of course we were mostly in the tourist areas and didnt get away from the metro much

B

[llecs]

Thanks. The house is gone though. We were 24 hours too late with an offer. We'll find another one.

We're in the DC area and real estate comes at a premium here. I wish it wasn't so expensive.